Through the crisis, many executives are more focused than ever on existing vs. new customers. And there is a good economic reason for this.
Did you know…
- 62% – of solution providers indicate their top priority is “Driving growth through existing customers” (Forrester)
- Expansion revenue from existing customers is 3 to 4 times less expensive to acquire than revenue from new-logo customers (TSIA)
- The probability of selling to a new prospect is only 5-20%, while the probability of selling to an existing customer is 60-70% (MarketingMetrics)
So how do you assure success with existing customers?
Many organizations have special growth reps and assign a customer success specialist to do quarterly business reviews (QBRs). And in these reviews adoption and usage are the main focus.
Indeed, you have to make sure the customer is leveraging the solution – to assure renewal and as a basis for up / cross selling; however, most executives are taking a harder-line view of the business, looking to save wherever they can, and do more with less. Your business owner will be under great pressure to not only show that the solution is being used, but that it is contributing to better economics.
Frugal executives will be consolidating solution providers and scrutinizing subscriptions and renewals. They will be pressing your champion not just interested in whether the solution is being leveraged but understanding how much return on investment (ROI) your solution has delivered.
How many of your business owners can connect the dots to the savings, productivity / process improvements, risk avoidance and growth you are delivering?
And if they can’t demonstrate to executives a realized value, will your renewal be cancelled or heavily discounted? And what about the chances that your expansion proposal gets approved, when the executive can’t clearly see what value the prior purchase has delivered, much less take a chance on something new in this climate?
You can’t leave the quantification of Realized ROI to chance.
In fact, if you want to assure you aren’t a victim of vendor consolidation, that your renewal is approved, and your expansion proposals are accepted, you will need to evolve to a proactive approach, delivering quantified value analysis in every QBR.
Okta Value Realization: An Example of Realized ROI Success
A leading security provider, Okta, who sells their solutions as a service, sought to improve their customer success engagements, moving beyond adoption and usage to focus on the actual savings and business value delivered to each customer.
On select engagements, value engineering would do a custom realized ROI analysis, but this couldn’t scale beyond a few big accounts to all of the accounts that needed a realized analysis.
To help meet this challenge, we worked with Okta to create a value quantification tool that was easy for every customer success specialists to use to help drive value into each quarterly business review.
Focusing on observable metrics, the Okta Value Realization tool first helped to structure value realization discovery, collecting information about where the customer started, and where the provider was able to take them across key performance indicator (KPI) metrics such as help desk calls, and move, add, change requests.
The tool compares the “before vs. after” to tally the realized value across eight different value drivers where Okta provides savings, productivity improvements and risk avoidance
Once the current value realization has been tallied, the tool helps Okta go further, using the collected metrics to help the customer and success rep to understand how much additional value could be realized:
- If all the purchased Okta licenses were adopted and used, helping the customer realize additional value without having to invest more
- If additional users from other groups and divisions could be licensed on Okta
- If additional solution sets / modules were licensed and leveraged.
Armed with the tool, to interactively collaborate with the business owner, and the analysis report the business owner could share with executives, the customer success team was able to quickly transcend beyond just a discussion on adoption and use, to now include a tally of value delivered and value potential. Elevated discussions with customers led Okta to leverage financial justification on value delivered to significantly less churn, reduced discounting and an increase in expansion revenue.
Click here to learn more about this success from the customer themselves:
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